Mike’s Five Tips for Surviving Closing
As the summer selling season heats up, I’m beginning to hear a lot of grumbling in my office about closing disasters. While no agent can ever honestly claim a perfect closing track record, some agents have better “luck” than others. However, it isn’t “luck.” It’s understanding a few simple basics that make a world of difference.
Assuming your basics are down (no surprises in the credit report, you didn’t buy a Maserati just before closing, no job losses, etc.), here are my tricks to make life easier for my buyers and sellers.
- Close earlier in the day. If something goes wrong and you’re closing late, it’s easier to push closing later that day while the problem is fixed. If you close in the late afternoon, it may be impossible to repair the problem during business hours. There’s also the danger of running into time zone issues if your bank is on the east coast. (I.e. Just because it’s 3:30 PM in Wisconsin doesn’t mean that your processor is still on the job at 4:30 PM in New York.) Always take a morning close over an afternoon close.
- Never close on a Friday. Friday is the most popular day for closing and everybody at the bank, title company, and real estate office are overworked. Overworked means a greater chance for errors and fewer people available to correct those errors! The fix is simple; you can avoid these problems by closing any other day of the week. Close on a Monday, Tuesday, Wednesday, or Thursday.
- Do not close at the end of the month, and never close on the last business day of the month. More closings occur at the end of the month than at any other time of month. This is akin to closing on a Friday and has the same problems. Try to close in one of the first three weeks of the month or at the very beginning of the last week.
- Avoid anything to do with holidays and holiday weekends. There’s only one thing worse than closing on a Friday afternoon at the end of the month; it’s closing around any major holiday. Not only do you have the same concerns as described above, but plenty of people leave town for vacations. Rest assured that at least one of these people will be the only person who can fix whatever snag popped up at the last minute. Avoid closing on a holiday and avoid closing within a few days of that holiday to account for extended vacations.
- Keep in contact with your mortgage processor, title company, and Realtor. Send an email two weeks before closing to ask if anything is still outstanding. Do this again one week before closing. Send additional follow-ups five, three, and one day before closing. While this seems excessive, these five quick and polite emails will go a long way to ferret out problems. They will also let everybody involved know that you are watching! Stay in frequent contact with email inquiries two weeks, one week, five days, three days, and one day before closing.
- Tell everybody involved and provide plenty of documentation in “odd” situations. Odd situations include estates, Power of Attorney sales, multiple sellers or buyers (beyond husband and wife), LLC/business entity and Trust purchases and sales, purchases and sales by IRAs, short sale and foreclosure situations, properties with easements and legal entanglements, etc. Sellers should insist that their agent have the title company do a “search and hold.” This is wise in all circumstances but it’s especially vital when there is an “odd” situation. There is no such thing as too much disclosure when it comes to potential title issues.
Bad closings are a huge inconvenience at best or lead to litigation at worst. Imagine seven people in line, where each is purchasing a home from the next. We call this a “chain” in the real estate world. One sale fails to close, which means everybody beyond that person also fails to close. (Quiz: How many lawyers get called after people get bills for non-refundable services and full moving trucks are idled for the weekend?)
While these five tips can’t guarantee a smooth close, they lessen the chances of getting stuck in a disastrous closing. Pay attention to closing to save a lot of headache, time, and trouble!